In February, the Malta Financial Services Authority (MFSA) proposed a consultation document which outlines the proposed establishment of a new framework for Collective Investment Schemes (CISs) that are structured as Limited Partnerships without legal personality, a structure referred to as the Limited Partnership Funds (LPF) framework.
The objective of the Limited Partnership Funds (LPF) framework
The primary objective of the Limited Partnership Funds (LPF) framework is to bridge the gap between local and international markets in the establishment of Collective Investment Schemes (CISs). This is a significant move given that similar changes have already been implemented in foreign jurisdictions and Malta is now following suit to remain competitive and relevant in the global financial landscape.
Strategic Response
The Limited Partnership Funds (LPF) framework is designed as a strategic response to address previously identified shortcomings in the local regulatory framework under the Investment Services Act. By implementing this framework, Malta aims to enhance its financial services sector and increase its appeal to international investors.
Regulatory Jurisdiction
Under the proposed framework, Limited Partnership Funds (LPF) would be solely regulated by the Malta Financial Services Authority (MFSA). This means that the MFSA would be the primary authority overseeing these funds, without the involvement of any other entities. Additionally, the registration and authorization process for LPFs will be fully managed by the MFSA. This streamlined approach is expected to simplify and enhance the efficiency of the regulatory process.
Investor Eligibility
The MFSA is evaluating investor eligibility as a crucial aspect of the LPF framework. The authority is contemplating whether this framework should be restricted to professional investors. This decision will significantly affect the types of investors who can participate in schemes established as LPFs. The proposed features of the framework are largely similar to those under the Companies Act. It involves creating a collective investment scheme through a Partnership Agreement, which requires at least one general partner and one limited partner. The key distinguishing feature of this structure is that it does not possess a separate legal personality.
The Next Steps
Once the amendments to the proposed legislation are finalised, the MFSA will publish its Feedback Statement. Following this, other details can be finalised, including the rules and supporting documentation necessary for implementing the framework.
For more details regarding the aforementioned consultation document, the drafted regulations, and the outcome report, click here.
